'Zimbabwe to record biggest inflation decline'

Zimbabwe is expected to record the biggest fall in inflation in the southern African region next year, according to the latest report by the African Development Bank (AfDB).

This is largely due to a tight monetary policy stance by the Reserve Bank of Zimbabwe (RBZ) as well as the fall in global prices, the AfDB said in its economic outlook report for the region.

"Inflation in the southern  Africa region is expected to halve to  6,7  percent in  2024,  with the biggest deceleration expected to occur in  Zimbabwe – from  184,1  percent in  2022  to  36,1  percent in  2024 – as the Government maintains a tight monetary policy and global prices decrease," according to the AfDB report.

Over the past four months, Zimbabwe experienced the highest global inflation rates, which the Government largely blamed on unjustified price increases by some businesses.

At 101,3 percent year-on-year in July, Zimbabwe has one of the highest inflation rates in the world. During the past four weeks, prices of most commodities have been going down, with retailers pegging prices at almost par with the official exchange rates.

In 2022, the Southern Africa region's gross domestic product (GDP) growth barely reached 2,7 percent, a level much lower than the world's  (3,4  percent)  and  Africa's  (3,8  percent)  averages.

This is largely a reflection of sluggish performance in South Africa where civil unrest, natural disasters—such as unprecedented floods and droughts, locust infestations, renewed anti-immigrant protests, and cost-of-living crisis in the run-up to the 2024 national election—compound the electricity crisis to hamper economic growth.

Intense adverse weather events also contributed to stalled growth in several countries including Zimbabwe, Zambia, Malawi, Madagascar, and São Tomé and Príncipe).

Yet, the overall subdued growth performance masked positive achievements in some countries. Angola recorded a strong economic recovery attributable to favorable oil prices.

Likewise, the diamond industry performed well, as sanctions against Russia are benefitting country exporters (Namibia and Botswana) through higher prices and market share.

Similarly, the easing of global travel restrictions, imposed during the pandemic,  contributed to a  rebound in tourism in 2022, which fueled growth in some tourist-reliant economies such as Botswana, Mauritius, and São Tomé, and Príncipe. Further slowdown of growth in the region is expected in 2023 at 1.,6 percent, followed by a slight improvement of 2,7  percent in  2024.  "Subdued regional performance is linked to the lingering political and structural issues in South Africa, which drag down regional growth, as well as the impacts of Russia's war in Ukraine, which continue to put pressure on energy and food prices," said the AfDB.

Projected growth varies across Southern African countries, reflecting in part a contrasting trend in terms of trade and domestic structural issues. Top performers over 2023-2024 will be Mozambique, Madagascar, Mauritius, Eswatini, and Zambia.

In Mozambique, growth will be mainly boosted by increased demands for liquefied gas, and in Madagascar by the mining sector's recovery buoyed by higher price of nickel.

In Zambia, an improved macroeconomic environment coupled with strengthened mining policy and improved electricity supply will be the primary drivers of GDP growth, while in Mauritius the rebound of tourism activities will sustain growth in 2023 before progressively decelerating to its long-term trend over the medium run.

"In this context, per capita income growth for most countries in the Southern African region is short of the growth rate needed to reverse the increase in poverty induced by the pandemic and to put the region on track to meet SDG1. High poverty and inequality rates remain endemic across the Southern Africa region," said the AfDB.